Whether you’re looking for a home for your own family or you’re searching for a new property to add to your investment portfolio, it’s important to consider the neighborhood in which the property resides.
The property itself is massively important. You’ll need to think about its size, layout, structure, condition, and more. But if you exclusively prioritize these qualities, while neglecting the neighborhood around the property, you could end up making a poor decision.
There are good neighborhoods and bad neighborhoods for real estate. But as a real estate investor, it’s in your best interest to search for growing neighborhoods – in other words, neighborhoods of varying qualities that are on an upward trajectory.
Why are growing neighborhoods so important for NW Arkansas real estate investors and how do you spot them?
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Why Are Growing Neighborhoods So Valuable for Real Estate Investors?
Let’s start by exploring why growing neighborhoods are so valuable for real estate investors.
As the term implies, growing neighborhoods are ones with positive momentum. This is typically associated with rising employment, declining crime, rising school quality, and of course, rising home prices. The obvious benefit is that if you invest in real estate in a growing neighborhood, it’s very likely that the value of your property will grow over time.
It’s also important to focus on growing neighborhoods because good neighborhoods don’t always last forever. You probably don’t have to look far to find a neighborhood that used to be good but it’s currently in a state of disrepair.
Similarly, questionable neighborhoods can present incredible investment opportunities. They may have a few quirks to sort out, but they typically offer real estate at much lower prices, and with much less competition vying for those properties.
Signs of a Growing Neighborhood
So what are the signs of a growing neighborhood?
No single factor can tell you, and even the best predictions can be wrong. With these factors, taken together can help illustrate whether a neighborhood is poised for growth or not.
- Upward trending home prices. One of the most obvious signs of a growing neighborhood is an upward trajectory in home prices. Take a look at how home prices in the area have changed, year over year, for the last several years. It’s okay if there are a couple of years with stagnation or even a decline, but if the general trend is rising, it’s a good sign for the neighborhood. Do keep in mind that American real estate is generally growing, so you should be on the lookout for neighborhoods that are growing at a faster rate than the American average. Obviously, past growing prices are not necessarily indicative of future growing prices, but when taken with other factors, this can be a powerful consideration.
- Job opportunities. You also need to look at job opportunities in the area. You want to find neighborhoods with plenty of employment opportunities already, and more employment opportunities to come. Are there any major employers in the area who have announced expansion plans? Are there corporate powerhouses who have considered moving near this location? Are employment figures consistently rising in this neighborhood? Without jobs, people can’t afford housing, so areas without many job opportunities and those with declining job opportunities are poised to decline in value.
- Rising economic indicators. There are lots of economic indicators to consider when evaluating the economic health of a given environment. Experts look at things like employment statistics, wages, business statistics, income and personal debt, and even transportation trends to get a feel for how a local economy is performing. When you review economic indicators like these, do you notice a rising trend? Is the economy in this area healthy and growing, or is it currently struggling?
- Improving crime statistics. There are good investment opportunities to find in areas with a wide variety of crime rates. Obviously, low crime rates are better, and if you’re looking for a home for your family, this probably isn’t a factor you want to compromise on. That said, it’s perhaps even more important to look at the trend of crime rates in the area than it is the current crime rate itself. Are crime rates generally going down? Is the severity of crimes in the area decreasing?
- Improving school quality. Similarly, your family may reasonably prioritize areas with excellent schools already, but if you’re looking for the best investment opportunities, you should look for areas with consistent improvements in school quality. Areas with mediocre schools that keep getting better and better might pay off better than areas with excellent schools that can only go down in quality.
- Arts and culture. Also pay attention to arts and culture in the area. This may seem like a superficial or aesthetic consideration, but it’s actually an excellent indication of future growth potential. At the risk of perpetuating a stereotype, artists are often poor, and they often look to live in areas that are reasonably safe, yet inexpensive. As they begin engaging in their community, building up the local culture and facilitating more creative endeavors, the area becomes more attractive, inviting wealthier people and a wider variety of people into the neighborhood. As a result, neighborhoods with thriving arts and culture districts tend to present excellent real estate investing opportunities; the properties are relatively cheap, but they might explode in prices in the near future.
- Beautification. How beautiful is this area? Are people making an effort to make it even more beautiful? Have there been recent efforts to plant more trees, clean up trash, fix streets and sidewalks, and so on? Are neighbors in the area working together to make the place more enjoyable for everyone?
- Media attention. You can also spot growing neighborhoods from increased media attention. Is there a news website or social media platform focused on local news that’s getting more and more popular? Do you keep hearing stories about major investments in the area or big events that keep occurring there? Be careful when evaluating this factor, has increased media attention could be a sign that the growth has already manifested. You don’t want to invest in a growing neighborhood too late; if you do, you’ll miss out on all the growth and pay at the highest prices.
- Favorable conversation. When people talk about this area, what do they have to say about it? Growing neighborhoods tend to have a lot of buzz around them, and people should have many interesting things to say about them. Bentonville, for example, is a super interesting city – and it keeps getting more interesting by the year.
- Unique characteristics and novel factors. Finally, consider unique characteristics and novel factors that could influence the growth rate of the neighborhood. For example, is there a lot of undeveloped land that could be used to build more homes in the near future? Is this area particularly defended against certain natural disasters?
Conducting Your Search
You know what to look for in your search for growing neighborhoods. So how are you supposed to conduct that search?
- Start from major cities and work outward. Fayetteville, Springdale, Rogers, and Bentonville are four of the biggest cities in Arkansas, and they’re all in the Northwest. Start from these big cities and work your way outward, investigating various interior neighborhoods and then suburbs define ideal areas for investment.
- Look at the objective metrics. Some neighborhoods may seem good, bad, growing, or stagnant on the surface, based on your intuition. But it’s much better to look at the objective metrics as rationally as possible. Not every factor for a growing neighborhood can be easily quantified or compared, but the more you quantify and compare, the better.
- Visit. These days, there’s a lot you can learn by researching online, but if you want the full picture, it’s a good idea to visit the neighborhood you’re investigating. Once you have your boots on the ground, you’ll get a much better perspective of what this neighborhood feels like and what types of people live there. This is also a great opportunity to have conversations with people who live and work in the area.
- Strike up conversations. In line with this, strike up as many conversations as possible with people who live in and near the neighborhood in question. These conversations don’t have to be deep, nor do the people you speak to need to be real estate investing experts. Instead, get a feel for what people love about this neighborhood, what they don’t love about this neighborhood, and what they think is going to happen to the neighborhood in the future. You’ll probably find a diverse array of opinions, but try to consider them all together and find the “average” opinion.
- Consult with experts. Finally, work with genuine experts in Arkansas real estate. An Arkansas real estate agent will be able to help you find growing neighborhoods and evaluate the quality and growth trajectory of neighborhoods already on your radar.
Arkansas real estate investors owe it to themselves to seek out growing neighborhoods in the NW Arkansas area. Once you find a neighborhood with a suitable growth trajectory, you can find promising deals in the area and strategically balance your portfolio to take full advantage of the growth you anticipate in the coming years.
Of course, it’s difficult to find good neighborhoods and it’s even harder to find properties that perfectly fit your needs. That’s why it pays to work with real estate agents in the NW Arkansas area, who have the knowledge and expertise to help you achieve your investing goals.
Ready to get started? Contact us for a free consultation today!
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